EU tells Bulgaria to cut deficit by 2011

The European Union's executive commission on Tuesday told Bulgaria that it must bring its deficit below 3 percent of GDP by 2011 after sharply revising its public finance forecasts for this year.

The Bulgarian government blames a drastic fall in tax revenues and extra infrastructure spending needs for forcing it to raise its expected budget gap from 1.9 percent to 3.9 percent of gross domestic product.

The sudden and large change in the figure has alarmed EU officials who called on Bulgaria to tighten spending controls and push through planned reforms to public administration, health care, education and pensions.

It should make cuts of at least 0.75 percentage points to its deficit next year, the EU says, and Bulgaria will have to report back to the European Commission on its progress.

The country's deficit is above a 3 percent limit imposed by EU rules that require a country to set a timetable to reduce the budget gap after talks with EU finance ministers _ who often back the commission's recommendations.

The EU's economy commissioner has also warned that he may send officials to check the country's statistics.

Greece shocked other European countries by suddenly hiking its deficit estimates last year _ triggering a loss of confidence in the EU's ability to rein in debt and deficits for members of Europe's currency union.

The euro has slid sharply since then and Greece was ultimately forced to seek a bailout from EU nations and the International Monetary Fund after markets hiked borrowing costs over fears that it may default.

Bulgaria earlier this year froze plans to join the euro in the near future.

The country's three-year membership of the European Union has been rocky.

The EU's executive commission froze almost (EURO)500 million ($629 million) in aid in 2008, citing corruption, organized crime and spending irregularities.

The funding for farmers, road building and other infrastructure projects was recently unlocked after Prime Minister Boiko Borisov took first steps to uproot corruption.